According to statistics, over US$612 billion in venture capital activity was invested globally in 2021, a 108 per cent increase in 2020 despite the pandemic challenges. Investments rose in every major region, with North America and Europe seeing investment activity more than double in 2021. Yet, for the Middle East and North Africa (MENA) markets, the growth trend is even stronger, with investment value increasing by 165 per cent in 2021 as compared to 2020.

Although most PE and VC investments still originate from North America, the MENA is rapidly gaining traction. More startups and institutional investors, and PEs choose to reside in the region. We are also seeing increasing inbound investment and activities from Middle Eastern sovereign wealth funds.

Meanwhile, the actions of governments and certain characteristics of the region have contributed to this rise.

The strong government supports

MENA-based startups attracted over US$1.2 billion in the first half of 2021, representing 64 per cent year-on-year growth, among which 71 per cent was invested in the UAE (mainly through the various financial centre free zones, such as the Dubai International Finance Centre and the ADGM), Saudi Arabia and Egypt.

The UAE and Saudi Arabia have implemented fiscal reforms and unleashed large-scale programmes to privatise assets, increase public-private partnerships, unlock value by monetising real assets and infrastructure, improve public benefits and services, develop social and human resources, and optimise government operations.

These initiatives, together with complementary legal and regulatory reforms and social changes, ultimately make these countries more attractive destinations for foreign capital with more diverse, efficient and sustainable economies.

The MENA markets recognise the importance of the venture capital sector to achieve higher economic aims. Government-led initiatives have therefore been a key driver of growth in the venture capital sector in the region, evidenced by the development of startup ecosystems.

The strong sector supports

Saudi Arabia’s Public Investment Fund (PIF) has been supportive of the ecosystem mission. PIF’s support of fund managers has also formed a key aspect of its strategy. For the sole purpose of promoting the development of a venture capital ecosystem, two years ago, PIF established Jada, a fund of funds company. By funding venture capital funds and private equity focused on the Saudi market, Jada’s mandate is to create a self-sustaining growth platform for local SMEs.

Also Read: How eWTPA is bridging emergent new markets and Chinese expertise

On the other hand, PIF’s Sanabil Investments commits approximately US$2 billion in capital per annum in private investments that include venture, growth capital and small buyouts.

With this commitment, Sanabil aims to partner with originators of good business ideas: entrepreneurs who harness the innovations of mind and matter to fulfil societal needs in ways that are scalable and sustainable.

Taking the newly-established eWTP Arabia Capital (eWTPA) as an example, the company launched its first fund (Fund I) in 2019, backed by the sovereign wealth fund of Saudi Arabia, Public Investment Fund (PIF) and eWTP Capital (Alibaba Group and Ant Finance Group).

Within a short period of time, this US$400-million-fund has already invested into 16 companies across digital infrastructure, core technology and platform, and consumer and enterprise services which span enterprise services, cloud services, cyber security, fintech, cross-border supply chain, retail and consumer, e-commerce, logistics and digital entertainment and others, which are to work together and build a unique digital ecosystem in the MENA region. Currently, 13 out of the 16 portfolio companies are already operating and growing the MENA markets.

The unique MENA offering

Housing 7.5 per cent of the world’s total population, the MENA region has a predominantly young population. Of the 600 million people in the region, more than 50 per cent are under 25 years old. This enables a customer base that welcomes disruptive business models and a growing culture of entrepreneurship.

Traditionally, MENA also benefits from its geographical location as a gateway to both Africa and Asia. Given that one-third of the world’s population lives within a four-hour flight of Dubai, the region’s proximity to Africa and Asia is an attractive attribute for startups looking to capitalise on these vast emerging markets.

In H1 2021, 31 per cent of MENA-based venture capital transactions involved investment from outside the region. Some of the larger acquisitions in the Middle East by foreign investors in recent years have shown the extent of opportunities that exist there. These include Uber’s acquisition of MENA ride-hailing business Careem in 2020 for US$3.1 billion and Amazon’s acquisition of MENA online retailer Souk.com in 2017 for US$650 million.

These high-profile deals indicate an increasing strength in the underlying M&A market in the Middle East, creating more exit opportunities for both founders and investors. The challenge for the region is for local equity markets to mature so that listings on local exchanges such as the ADX or DFM become a viable and commonplace exit strategy.

Final thoughts

With the right balance between investment returns and startup potential, PEs and VCs are more intrigued by regions like MENA, which offers an interesting mix of investment options. We are also seeing another wave of startups of Chinese origin expanding into the region for the same reasons. Likewise, Southeast Asian countries which offer a similar welcoming and flexible environments also are attractive to investors and entrepreneurs.

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Emerging businesses with innovative value propositions offer a myriad of opportunities to solve market problems and attain business growth. As a startup enabler, the Japan External Trade Organization (JETRO) helps Japanese startups in identifying key resources needed for market expansion and product development.

In partnership with JETRO, e27 is working to help connect startups with key players and mentors in the region with the goal of enabling more collaborations among Japanese and Southeast Asian businesses. Specifically, this partnership is a market entry initiative to bring Japanese innovations into key startup ecosystems in the Southeast Asian region, as well as have a deeper understanding of industry trends and strategic opportunities that are unique to these respective ecosystems.

Also read: Apps UP 2022: A platform for today’s leading mobile apps to shine!

The project is aimed at startups in various stages of development, from pre-commercialisation, all the way to startups who have launched their solutions to market and are ripe for further market expansion.

In line with this, these entities are keen to customise their respective product and market strategies as they implement their expansion into different territories with their own respective market contexts and regulatory considerations. JETRO-supported companies work with various partners in their expansion strategy. For example, a medical technology company is consulting with medical mentors to understand the health tech market and regulatory landscape in Singapore.

This year, JETRO, together with e27, is working with three leading startups that are seeking strategic business partners and mentors in the Southeast Asian region.

Sustainable alternatives

Times Bridge Management (TBM) developed a breakthrough ecological material that serves as a sustainable and viable alternative to plastic resin called LIMEX. Developed in Japan, LIMEX is a composite material made of over 50% limestone, an abundant resource. Its commercial use is as a plastic or paper alternative, thereby contributing to the reduction of GHG emissions and plastic waste. TBM has also developed a material circulation platform to collect and recycle used materials, which contributes to a circular economic process. Their other product, CirculeX, is a new material that has 50% or more recycled material such as biomass-based or fossil fuel-based resins with LIMEX. This promotes resource circulation and meets diverse customer needs through various applications in packaging, logistics, material handling and building materials.

While the cost of plastic resin has been steadily increasing, and existing plastic alternatives in the market are much more expensive, LIMEX can be more cost-efficient than plastic. LIMEX is economical as it is mainly made from limestone and the price is stable. Apart from its cost competitiveness, LIMEX as a patented technology in over 40 countries around the world also churns out higher quality bags with a more uniform filler dispersion compared to conventional bags with mineral fillers.

Also read: Get Privy for secure digital ID solutions

The great thing about LIMEX as a material is that plastic moulding companies do not need to invest in new machinery for manufacturing products using this material. They can instead use their existing moulding technology and machinery. TBM has various global customers, including Indonesia, Vietnam, Thailand, and India. They opted to switch to LIMEX material in their shopping bags due to cost reduction and eco-friendliness. 

The company has since raised almost $200M in funding. Specifically, SK Group agreed on a $123 million capital and business alliance to accelerate the global expansion of LIMEX. TBM is looking for plastic manufacturing partners in the Southeast Asian region where they can supply their LIMEX material as a cheaper and more durable plastic alternative.

Expanding access to fintech solutions

Fintech startup Credit Engine runs an online lending system and automatic debt collection with data-driven optimisation. They offer both standalone and white-labelled software-as-a-service lending and digital debt collection solutions, that can be used by small and medium businesses as well as large enterprises to digitalise loan operations of banks, thereby benefitting from streamlined customer communications and reducing paperwork. 

Credit Engine is a seed stage startup with US$1M funding to date. It is seeking business partners in Singapore as they expand access to its solution that simplifies the online debt application and collection process through digitalisation. Financial and fintech entities who want to partner for outsourcing their non-performing loans through a debt collection system can stand to benefit from Credit Engine’s solutions. The company is also open to mentors, accelerators, VCs and consultants who can provide strategic advice and business linkages in the Southeast Asian region. 

Also read: The true cost of inaccurate addresses in a world of daily deliveries

If you are keen on connecting with any of the startups above, please reach out to Joel@e27.co.

It is e27’s mission to connect startups with the right resources, the right tools, and the right people not only to help them make individual impacts on the community but for the startup ecosystem as a whole to flourish and thrive.

The Japan External Trade Organization provides business support services to companies expanding to Japan. Since its founding in 2003, JETRO has supported more than 15,000 business investment projects and helped over 1,500 companies successfully invest in Japan. As a non-profit organisation, JETRO clients have gained support for their business in the fields of visa, immigration and HR matters, office space; identification of local government subsidies, and tailored market studies, among others.

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Photo by Mikhail Nilov via Pexels

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This article is produced by the e27 team, sponsored by JETRO

We can share your story at e27, too. Engage the Southeast Asian tech ecosystem by bringing your story to the world. Visit us at e27.co/advertise to get started.

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ShopBack raises US$80M from Temasek-backed 65 Equity Partners
ShopBack has more than 35M users across 10 countries and powers US$3.5B in annual sales; The platform also facilitates 1M shopping journeys for over 10K merchant partners every day.

SG mobile app developer to list in US via US$2.5B SPAC deal
Asia Innovations Group will merge with Magnum Opus Acquisition, bringing in US$200M in cash to the firm; The deal is expected to conclude in Q1 2023; It also intends to raise up to US$150M in additional capital as part of the merger process.

Malaysian graftbuster probes MDEC over US$4.9M in false claims
The anti-graft agency’s investigation is centred upon two undisclosed companies that were paid claims by MDEC amounting to more than 19M ringgit and more than 7M ringgit to run training programmes from 2016 to 2020.

‘From a cybersecurity perspective, the Asian market still uses legacy tools’
e27 talked to Daniel Bernard, CMO, SentinelOne, which recently launched a US$100M global cybersecurity fund, S Ventures Fund; The VC firm sees a trend for desired automation, consolidation, and cloud security.

JD.com founder settles lawsuit for alleged rape
A former University of Minnesota student accuses Richard Liu of rape in 2018; A lawsuit was handed to Liu in 2019, with the former student accusing him of six counts of false imprisonment, civil assault and battery, and sexual assault or battery.

Crypto lender Nexo in talks to invest in or buy more companies in Asia
These companies range from distressed ones and those facing difficulties for various reasons to businesses; The potential deals are aimed at either expanding its footprint in Asia or allowing it to move into new verticals within crypto.

NFT gaming startup Metastrike closes US$3.3M funding round
The investors are GD10 Ventures, Jump Capital, and Kucoin Labs; Metastrike is an FPS-RPG, featuring an array of digital assets that players can collect and trade on the open market, such as weapons, skins, and projectiles.

Terra co-founder Daniel Shin likely to testify on Terra collapse
While the subject of the probe was not made public, Shin will likely be questioned on the crash of the company’s TerraUSD and Luna, Terra’s native token; His co-founder Do Kwon is also under investigation by Korea’s police.

Membership-driven e-commerce platform for essential goods Cosmart raises US$5M
The investors are Lightspeed, East Ventures, and Vertex Ventures SEA & India; Cosmart has already partnered with over 80+ principals and 500+ brands and has delivered over 100,000 products in Indonesia.

No funding winter for early-stage deals in SEA, say VCs
While there’s been an overall decline in early-stage deals in SEA during the first nine months of 2022, most VCs feel the region has largely managed to beat the global funding winter.

500 Global backs HK insurtech firm Yas’s US$4.5M raise
Other backers are Noria Capital, Zemu VC, and JKL Capital; Yas offers blockchain-enabled insurance products that provide coverage for accidents and NFT investments.

Xend founder launches Philippine proptech venture builder
Bjorn Pardo will also be spearheading the venture builder AHG Lab’s push into “proptech+”, which he says is the use of proptech solutions to address the needs of surrounding communities in addition to the needs of real estate stakeholders.

Echelon 2022 to discuss the state of the SEA startup ecosystem
Catch leading experts and industry insiders at Echelon 2022 as they discuss the post-pandemic tech startup landscape; They will touch upon why startups need to pay attention to debt restructuring, expenditures, marketing, and fundraising.

MENA on the rise with push and pull global economic drivers
With the right balance between investment returns and startup potential, PEs and VCs are more intrigued by regions like MENA.

The profitability trade-off: How startups navigate uncertain times to achieve quality growth
As startups progress from seed to early-stage and then growth and late-stage funding, they must recalibrate between profitability and growth.

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Echelon 2022 aims to provide intimate and focused discussions on key topics and business matching services to facilitate business-driven connections during the two-day event. e27 will curate and invite key stakeholders of startups, investors, corporates, and ecosystem enablers to drive towards fruitful business outcomes at Echelon.

The 2022 Echelon edition will be co-located with SWITCH at Resorts World Sentosa from 27 to 28 October 2022. Learn more here. 

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The post Ecosystem Roundup: ShopBack raises US$80M, MDEC under investigation for US$4.9M false claims, SG’s ASIG to list in US via US$2.5B SPAC deal appeared first on e27.

Today, in the Asia Pacific, most startups and SMEs are leveraging technology-enabled business models, with a keen focus on regaining growth and gaining an edge over competitors. And in line with this urgent push toward digitalisation and innovation, the cloud has emerged as a core foundation of this renewed focus.

According to a report titled “The Future of Cloud in Asia Pacific” by Cisco and Boston Consulting Group (BCG), the overall cloud spending in the region is expected to reach US$200 billion by 2024, with investments in cloud growing at a CAGR of over 20 per cent since 2018.

Getting clarity and some control over cloud expenses

Cloud has many benefits for businesses in a digital-first world, but it can be expensive.  Based on my observations, having worked with more than 300 digital native companies over the last six years, cloud costs contribute somewhere between 10-20 per cent of the overall operational spending (which can be even higher for SaaS companies).

Plus, there is an additional challenge – cloud cost wastage. Numerous surveys and reports conducted across APAC and beyond have shown that executives believe that over 30 per cent of their cloud spending goes to waste.

Furthermore, cloud costs might increase exponentially after IT upgrades or scaling an important workload. The cost increase might be a concern initially, but the workload enhancements could lead to more transactions and customers. To manage costs, establishing and adhering to metrics is vital.

As such, for small businesses and startups with low budgets, getting clarity on cloud expenses and figuring out how to optimise them is becoming increasingly critical. Startups are generally focused on creating product value and are thus often forced to choose between spending time implementing new functionalities and prioritising low-effort-high-impact architectural modifications to maintain momentum.

Also Read: How cloud computing is helping startups navigate the new normal

This is where modern technology consulting firms are stepping up to empower startups and SMEs to future-proof their businesses but just providing these solutions is not enough. Offering these solutions while helping startups and SMEs manage costs is the need of the hour, and at Searce, we are doing just that.

Lately, we see many businesses thriving on their DevOps (a set of practices, tools, and a cultural philosophy that automates and integrates the processes between software development and IT teams) to help keep cloud costs under control.

However, we think that FinOps or financial operations can be an ideal way to help startups control and manage their operating costs in a cloud environment.

What is FinOps?

FinOps is an operational framework that brings technology, finance, and business together to drive financial accountability. One of the main aspects of FinOps is to drive everyone to take accountability for their costs. To that end, every user of the cloud should feel responsible for their spending and empowered to take action to optimise it.

How FinOps is disrupting the approach toward cloud-led transformation

Reports suggest that the adoption of FinOps is swiftly advancing across APAC, and rightly so. There are multiple ways in which your company can cut down costs and benefit from the implementation of FinOps.

Reduced cloud costs

FinOps enable businesses to avoid big cloud bills and effectively cut cloud costs through visibility, cost optimisation, control and collaboration. On average, Searce customers have saved around 15-20 per cent after onboarding to their free cloud acceleration programme just by going through an assessment workshop where we highlight some obvious optimisations for these customers.

Generally, this is what a FinOps cycle looks like:

Inform Visibility and Allocation	Optimise Utilisation	Operate CI
Understanding the organisation’s resource consumption through context, data, budgets and forecasting.	Setting clear goals and targets by determining cloud costs through strategy, tracking, cost breakdown and cost growth boundary.	Aligning the organisation’s teams to business goals through drive and action with a keen focus on getting results for the organisation.

Complete transparency for better cost management and control

Through the principle of visibility in FinOps, you are able to identify organisational units, such as business units, teams, individual engineers, applications, cloud services and asset pools, and map them onto the cloud while preserving historical data for future trend analysis. As cloud resources are dynamic and constantly changing, it is important not only to capture the status quo but also to develop a process of getting visibility in dynamics.

Scope for cloud optimisation and improved performance

From analysing unused resources to VM re-flavouring (reviewing performance metrics from your VMs to see whether you need to choose less expensive flavours) and choosing the right instances based on business needs to storage and networking optimisation – cloud cost optimisation under FinOps covers a wide range of touchpoints.

Also Read: Desperate times, desperate measures: How to extend cash runway by reducing cloud costs

Implementing the principle of control in the FinOps process entails several items- creating dedicated budgets for granular items, setting TTL rules, creating clean-up scripts and so on.

Enables long-term optimisation and cost-saving processes

Lastly, collaboration in a FinOps cloud environment means cross-functional collaborations where engineers, operational, finance and executive teams are all involved. FinOps helps define cloud usage strategy, define and adjust cloud budgets, set cloud usage practices and review results and adjust if necessary.

Implementing FinOps

Now that it is clear how FinOps can help businesses manage cloud costs efficiently, it is also important to understand the ethos for the correct implementation of FinOps. Searce’s FinOps framework has been developed on the fundamentals of People, Process, and Technology.

People	Process	Technology
This aspect entails the team. The people who are responsible for FinOps practices, such as the core FinOps team and cross-functional stakeholders, use the cloud.	The Process dimension includes the steps (or Epics) you take to implement FinOps practices on the Cloud Platform.	Finally, the technology aspect consists of tools that can be leveraged to support the process.

yes

At Searce, dive deep into each of these pillars to analyse and establish one-time versus recurring actions, set clear goals and start measuring outcomes.

Cloud is an incredible solution that allows businesses to accomplish their goals and innovate at unparalleled speed. However, it requires methods to maintain financial discipline and ensure cloud costs don’t spiral out of control.

The mission of FinOps is to help businesses maintain this discipline while supporting their business goals. In other words, they preserve the reason the cloud is widely embraced in the first place – speed, flexibility, and capability. 

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Editor’s note: e27 aims to foster thought leadership by publishing views from the community. Share your opinion by submitting an article, video, podcast, or infographic

Join our e27 Telegram group, FB community, or like the e27 Facebook page

Image credit: Canva Pro

The post How can businesses improve their operating margin by controlling cloud costs appeared first on e27.

Although many dine-in food & beverage (F&B) businesses exist in Singapore, the dine-in experience has not evolved much, according to qlub, a Dubai-based payments startup focused on restaurants that recently expanded into Singapore.

The city-state is, however, blessed with robust banking systems compared to many Middle Eastern markets. This bodes well for qlub, a QR-based payment solution that enables customers to split their bills with their friends.

“We realised that although there are many F&B businesses in Singapore, the dine-in experience has not evolved much, especially when providing customers with convenience and speed at the table,” qlub (Southeast Asia) COO Yong Sik Hoe said in an interview with e27.

Since the onslaught of the COVID-19 pandemic, many restaurants in Singapore have begun phasing out the use of cash on the health and safety grounds of employees and patrons. Almost 90 per cent of Singaporeans already prefer going cashless, according to a study by qlub.

Post-pandemic, many F&B outlets are struggling, with rising rental and labour costs and difficulties in hiring/retaining staff. “I believe qlub can solve these problems by streamlining operations for these businesses,” Sik Hoe added.

Also Read: How digital technology can transform the food and beverage industry

qlub was established by a group of nine co-founders — many of who are Rocket Internet veterans with experience setting up and scaling companies such as Lazada, foodpanda, Namshi, and Snapp. It offers instant bill payments by scanning a QR code by phone, without app downloads or registrations required. Customers can use the service to split the bills with their friends and pay with Apple Pay, Google Pay, and debit/credit cards.

qlub is present in the UAE, Saudi Arabia, Brazil, Turkey, Australia, Japan and India, with more than 1,000 restaurant partners globally.

Early this year, the company raised US$17 million in a seed round co-led by Cherry Ventures and Point Nine.

In Singapore, more than 100 restaurants signed up to adopt qlub’s payment method since its pre-launch. Some of its partners are Merci Marcel, French Fold, Bar at Lorong 13, Ayam Penyet President, and Jibiru Yakitori & Craft Beer.

The firm employs ten people in Singapore and has team members in Malaysia, Indonesia and the Philippines supporting its operations.

According to RAS, F&B sales are about US$829 million per month or almost US$10 billion annually in Singapore. About 70 per cent of the transaction is made with credit cards. “Singapore has a high credit card penetration and digital adoption. It is a testing ground, and we see overwhelming results despite just being in the market for a few months,” he revealed.

Sik Hoe also remarked that most Southeast Asian markets have robust banking systems. “We plan to launch at least one more market in Southeast Asia by the end of the year and many more in 2023.”

The F&B industries of Singapore and Dubai are almost similar. However, the Singapore market is much smaller, therefore, more competitive and fragmented, with many other players offering QR ordering or payment solutions. This makes it challenging to onboard new restaurants.

“Fortunately, we have a dedicated team working round the clock to integrate new POS systems with our solution so that restaurateurs can continue using their preferred management software without sacrificing quality or efficiency,” Sik Hoe concluded.

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Echelon 2022 aims to provide intimate and focused discussions on key topics and business matching services to facilitate business-driven connections during the two-day event. e27 will curate and invite key stakeholders of startups, investors, corporates, and ecosystem enablers to drive towards fruitful business outcomes at Echelon. 

Here’s the full list of the speakers for the 2022 edition, which will be co-located with SWITCH at Resorts World Sentosa from 27 to 28 October 2022. Learn more here. 

The post ‘Singapore’s dine-in experience hasn’t evolved much despite many F&B outlets’: qlub COO appeared first on e27.